Create a Line of Products
Versioning is the practice of offering a range of products that are based on a core product. Versioning can generate new profits and growth in two distinct manners. First, offering new products to serve customers with unique needs. Drivers in warm climates (which don't require a high number of cranking amps to start a vehicle) can purchase Sears' $79.99 DieHard South automobile battery. Sears also offers a $179.99 Platinum version for drivers in frigid areas who need a more powerful battery (higher cranking amps). Second, offering good, better, and best products allows customers to choose how much to pay (a consumer's choice reveals their true valuation). McDonald's sells both $1 McDoubles and $3.59 Quarter Pounders. For the most part, the ingredients in these two sandwiches are similar. Price sensitive customers purchase McDoubles while those with larger budgets choose premium-priced Quarter Pounders.
Creating a versioned product can be implemented via three primary methods:
- Premium (higher quality, guaranteed access, faster, priority service, low deductibles/better coverage).
- Stripped down (lower quality, more restrictions, off-peak, private label, unbundling, higher deductibles and lower benefits).
- Meet unique customers needs (package size, extended and enhanced warranties, monthly clubs, bundling, platforms, different usage).
Versioning attracts new customers (with unique needs), as well as derives different profit margins for different customers. Stripped-down products offer discounts while premiums are derived from top-of-the-line versions. Increased profits from these high margin premium versions and new customers (with unique needs, as well as those who buy low-priced versions) are a key component of every company's pricing windfall campaign.